VIA Economic and Finance Forum jointly with Nagpur Chapter Cost Accountants held an evening session workshop programme on “Strategy Through Cost Management” at VIA Hall. Kirit Mehta Past Chairman of Institute of Cost Accountants, Western Region and Leading practicing CMA from Mumbai was the resource person. The objective of the programme was to make entrepreneurs, owners and senior Corporate Managers & Departmental heads aware of various management accounting techniques and cost management strategies to improve profitability and to make industry competitive through strategy making use of cost management techniques. The workshop introduced the basics of cost management system in any industry, development of effective MIS using data generated by cost management system for improving competitiveness of the industry. The entire session was supported by various case studies related to cost management strategies.
Kirit Mehta said Cost control, also known cost containment, is a broad set of cost accounting methods and management techniques with the common goal of improving business cost-efficiency by reducing costs, or at least restricting their rate of growth. Businesses use cost control methods to monitor, evaluate, and ultimately enhance the efficiency of specific areas, such as departments, divisions, or product lines, within their operations. During the 1990s cost control initiatives received paramount attention from corporate America. Often taking the form of corporate restructuring, divestment of peripheral activities, mass layoffs, or outsourcing, cost control strategies were seen as necessary to preserve—or boost—corporate profits and to maintain—or gain—a competitive advantage.
Kirit Mehta said Accounting plays a key role in all planning and control. It does this in four key areas: (1) data collection, (2) data analysis, (3) budget control and administration, and (4) consolidation and review. Accurate and timely information is the foundation of any accounting system, and thus detailed cost data are essential to any cost control endeavor. Management must understand—in great detail—how funds have been spent in the past and how they are being spent currently. As a result, companies invest large sums into sophisticated and error-resistant accounting systems in order to gain a nuanced understanding of their finances. He said to determine the strategic impact of cost-cutting, management has to weigh the net effects of the proposed change on all areas of the business. For example, reducing variable costs related directly to manufacturing a product, such as materials and transportation costs, could be the key to greater incremental profits. However, management must also consider whether saving money on production is jeopardizing other strategic interests like quality or time to market. If a cheaper material or transportation system negatively impacts other strategic variables, the nominal cost savings may not benefit the company in the bigger picture, e.g., it may lose sales. In such scenarios, managers require the discipline not to place short-term savings over long-term interests. One trend in cost control has been toward narrowing the focus of corporate responsibility centers, and thereby shifting some of the cost control function to day-to-day managers who have the most knowledge of and influence over how their areas spend money. This practice is intended to promote bottom-up cost control measures and encourage a widespread consensus over cost management strategies.
Summing up his talk Kirit Mehta said Control of the business entity, then, is essentially a managerial and supervisory function. Control consists of those actions necessary to assure that the entity’s resources and operations are focused on attaining established objectives, goals and plans. Control, exercised continuously, flags potential problems so that crises may be prevented. It also standardizes the quality and quantity of output, and provides managers with objective information about employee performance. Management compares actual performance to predetermined standards and takes action when necessary to correct variances from the standards.
The workshop was free and designed for Accountants, students, Individuals, Professionals, Businessman, Entrepreneurs’ in all positions. Industrialist, Business Owners, Entrepreneurs, SMEs & CEOs’, Professionals, Media person & participants from all sectors attended and took benefit from this workshop.
Earlier, floral welcome of Kirit Mehta was done by Anil Parakh, Vice President-VIA. Introduction was done by Shriram Mahanakaliwar, Chairman – Institute of Cost Accountants of India, Nagpur Chapter summing up & vote of thanks was done by Deepak Khanuja, Member, ICAI, Nagpur Chapter and the opening remarks of the speaker & the Programme was conducted by Anil Parakh, Vice President-VIA.